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C. Michael Armstrong, the newly appointed chairman-CEO of AT&T Corp., must decide as soon as he settles in Nov. 1 just how important advertising and marketing are to the giant phone company's future.

Most telecommunications industry analysts place marketing at the top of his agenda.


AT&T's "future relies on their ability to market. In the next few months, the direction they take on marketing and advertising will determine how successful they're going to be," said Jeffrey Kagan, president of Kagan Telecom Associates. "Advertising and marketing are vital to AT&T's comeback, but the big question is will Armstrong recognize that."

AT&T ad spending is down 40% so far this year, said an AT&T spokesman. That means the usual estimated $1 billion in yearly ad spending could be down to about $600 million.


"AT&T is in the midst of trimming $2.6 billion from overhead," said the spokesman. "There's hardly any account we're not looking at . . . We're trying to do more with less."

Analysts say part of the reason spending is down is the lack of focus at the company given its previous leadership quandary.

"You don't have much to advertise if you have no value proposition," said Traver Kennedy, director of worldwide research at Aberdeen Group. "I wrote AT&T off a long time ago because [stepping-down Chairman-CEO] Bob Allen didn't have a clue. Now I have high hopes because Armstrong does."

No one is counting AT&T of big spending out in the long run.


"This is really the quiet before the storm. AT&T will begin spending again and will get back to protecting its core long-distance business-and targeting MCI and Sprint," said Brian Adamik, VP, Yankee Group.

Already under way at AT&T is its annual informal fall review of ad agency work and an assessment of planning for the next year.

The spokesman said AT&T is talking to the agencies it already uses as well as those outside that would like to do business with AT&T.

AT&T's main roster agencies are Foote, Cone & Belding and Y&R Advertising, both New York; and McCann-Erickson Worldwide, San Francisco. Modem Media, Westport,

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